Customer expectations regarding the speed and quality of service delivery are skyrocketing. This is especially true for the younger generation of consumers. High level service becomes the default requirement. Applying for a loan, activating a service, ordering goods, accessing information about expenses, getting advice - customers want to perform all these operations here and now using devices that are at their fingertips. Consumers value their time more and more, they need instant Feedback, as well as a clear and user-friendly interface to meet their needs. good design information resources, the presence of online chats, an individual approach - this is a world to which customers have already become accustomed.
In order to meet high customer expectations, companies must accelerate the digitization of their business processes. To do this, it is not enough to automate existing business processes. Companies need to reinvent them. The main goals of digital transformation are to increase the speed of decision-making, increase the variability of processes depending on the needs and characteristics of the client, and reduce the number of employees involved in the process.
Consumers need instant feedback as well as a clear and user-friendly interface to meet their needs.
Digitization of existing processes is an expensive and often quite useless exercise, since all existing problems, shortcomings and “crutches” are automated. It is necessary to shift the center of gravity towards new opportunities that give the company competitive advantage. For example, instead of automating the work of employees responsible for working with clients, you need to create self-service systems, minimizing the number of mediators between the client and the final service or product.
The creation of digital business processes is associated with fundamental reengineering and revision of existing restrictions. On the initial stage restructuring is necessary to select those areas of the process that are related to customer experience. For example, how to reduce the time to make a loan decision from several days to several minutes, how to reduce the number of employees involved from X to zero, etc. Below are some examples from different verticals.
The bank reduced costs by 70% by introducing automated system mortgage pre-approval. The duration of the procedure was reduced from several days to several minutes.
The shoe chain introduced an inventory system in its stores, which made it possible to obtain information about the availability of shoe sizes online, which significantly reduced the waiting time for customers and the workload of sellers.
The insurance company has fully automated the decision-making process for simple transactions that take up most of the time of the customer service staff. As a result, the number of back office employees involved has been drastically reduced.
Digitization of existing processes is an expensive and often quite useless exercise, as existing problems and shortcomings are automated.
Another advantage of digitizing business processes is the ability to collect information about customer experience and automatically adapt individual process scenarios in accordance with consumer expectations. The current level of technology development allows us to accurately predict the needs of customers and the most relevant ways and channels of communication.
Recipes for Success in Digital Transformation of Business Processes
The human factor, outdated IT systems, lack of knowledge, customer habits are the main obstacles to digital transformation. We offer you 5 recipes that will make the transition to new business processes less complicated, costly and risky.
Management Support
Digital transformation must be supported and promoted by the top management of the company. This is a prerequisite for the successful implementation of the planned changes. The main task of management is to “sell” (in the good sense of the word) innovations to employees and show how they will affect each of them.
New processes can cause job loss for some employees. This fact does not need to be hidden and announced in advance so that the planned changes do not become the subject of rumors and gossip.
Availability of a competence center
To implement changes at the operational level, it is necessary to create a cross-functional team consisting of employees of departments who are responsible for certain aspects of the process. Often, a separate competence center is formed for this, consisting of employees of various profiles - customer experience designers and designers, marketers, IT representatives, etc. It is important that the members of this team are open to new ideas, have the required skills and are not afraid to experiment. Such a center may operate on a regular basis, broadcasting best practics inside the company.
Organizational transformation
Traditionally, new business processes are implemented within the existing organizational structure by employees who have long been working within existing processes. There are big risks in this approach, and here's why:
Any innovation takes time to learn and adapt. As mentioned above, this always causes a certain rejection among employees. Fears for one's work, unwillingness to change established practices, unwillingness to learn, fear of new things are traditional attributes of any intra-corporate changes.
When transitioning to new processes, employees will need more effort. It is necessary to maintain operational efficiency and in parallel to switch to new rules of work. In fact, employees must “change shoes” on the go, without changing the speed of movement. It can also create a negative background and cause hidden sabotage or open discontent.
The introduction of new processes by a team working on old processes is the same as changing shoes on the go without changing the speed of movement.
Therefore, in some cases it is more correct to create a new organizational unit or group within an existing unit to work on new digitized processes. As they migrate to the updated processes, employees of the "old" organizational units will move to the new division. This approach allows you to go through the transformation faster and with less financial and energy effort.
Evolutionary integration with legacy systems
The digital transformation of business processes affects a large number of legacy systems that cannot be eliminated all at once. Attempts to integrate old systems into new processes are fraught with lengthy projects with nebulous payback periods. In a few years, it may turn out that what has been done is no longer relevant. To reduce such risks, it is important to move in very small steps and “eat the elephant bit by bit”. The duration of individual initiatives should not exceed 6 months. Sometimes it makes sense to use simple temporary solutions to move to the "new rails", while creating integration interfaces between new services and old systems, or completely replacing the latter.
Attempts to integrate old systems into new processes are fraught with lengthy projects with nebulous payback periods.
Customer engagement and stimulation
Customer habits change slowly, which slows down the introduction of new service technologies. For example, a significant proportion of passengers at railway stations stand in line at the box office, although there are terminals nearby for self-purchasing tickets. Nurturing new models of consumer behavior is an essential element of digital transformation. It is important to identify the key reasons that prevent consumers from starting to use new services and develop activities to engage such customers. Training, demonstrating the benefits, along with stimulation makes it possible to achieve results. It is important that the first experience of interaction under the new rules be successful and emotionally positive. Below are some examples of how this might work:
Bank employees help office visitors to make payments through the terminal.
The client receives a bonus for filling out an application online.
The company offers special conditions making a purchase through mobile app.
Flexible business process management model
The classical theory of optimization and reengineering of business processes in the new realities is complemented by flexible approaches. The description of business processes, divorced from the business processes themselves, is becoming a thing of the past. Such a description quickly becomes obsolete, and serious labor costs are required to maintain its relevance. The best way have an up-to-date version of business processes; use tools to manage the company's business processes.
Other feature new approach - reducing the duration of the process optimization cycle. The use of A\B testing, control groups and other tools to evaluate changes made allows you to quickly check and implement changes in processes with minimal risks get negative results.
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Why is there so much talk in Russia about digital transformation, but few decide on it, and only a few bring the process to the end? , creator of Anti-Slavery, published in his Facebook, short abstracts from the speech at the Open Innovations forum.
Why don't digital transformers take root in business? And what should we all do about it? No, I'm not talking about transformers as devices. I'm talking about people and processes, of course.
Why doesn't it work? (main problems)
Cargo-cult of request. In reality, business does not want and is afraid of digital transformation (although outwardly it broadcasts the opposite): “They will come, and they will break everything,” but they are forced to implement it as an “order from above.” Therefore, they try to “secure” any person who comes to “transform” from all sides, conducting an insane amount of approvals and additional deterrents. In fact, this paralyzes any implementation. And a year later they are fired with the wording "Didn't do anything, just chatted."
Moreover, this very “security” is of three types:
- the first person itself (rare);
- the second level of tops (as often as possible);
- mixed: the first person says "Yes, I want", but does not give authority: "negotiate with the tops yourself."
Misunderstanding of the term (process) itself. By digital transformation, different businesses and owners understand completely different things: from the introduction of SAP to, God forgive me, groups in VK. Without understanding, they most often choose exotic people with incomprehensible competencies and begin to change their requirements and attitudes after each top trip to an industry conference or reading an article in Vedomosti.
Hype of the industry. Digital transformation is being talked about everywhere these days. Therefore, a large number of unsuccessful CIOs and digital directors, who are actually with a black ticket in their industries, are reformulating their resumes and selling their experience into digital transformation. And since they are objectively not successful (someone is lazy, someone is thieving or something else), then a year later they are fired with a big scandal. And then comes the opinion: all this digital transformation is just chatter in order to dilute the owner for money
There are no people with full competence. How do tops usually get hired? Preferably with extensive successful experience and from the same industry. The problem is that we have only five years of digital transformation. And in most industries, there is no successful completed experience of this process yet. Therefore, it is impossible to take the ideal one from your industry. They search for years and do not find. Further, see point three - they are burned on impostors who only know how to sell themselves.
What to do?
It is necessary to understand and explain that without the will of the owner (long-term), a unified strategy that does not change in the process, and trust, there will be no digital transformation - the process is not fast and painful, affecting the entire business.
- Explain to the business what it is digital transformation and make a competency map.
- Explain that this is a cross-platform competence (you need to search from those industries where the transformation entered first. You won’t believe it, but, for example, this is media as an industry).
- To create some kind of branch-based part-time MBA for people who can be quickly trained to this competency.
- Talk publicly about the stages and complexities and reference points of large transformations.
Digitalization is becoming the basis of a modern and efficient business. This concept hides the fullest possible implementation of digital technical innovations in all areas of business, including processes, products, services and decision-making approaches. For business digitalization to be complete, it is not enough to have technology as such - it is also necessary to clearly articulate business objectives and data.
Through digitalization at the initial levels, it is possible to optimally modify operations, reduce company costs and speed up the decision-making process. The introduction of digital technologies in business occurs in 3 stages:
- Small and low-risk initiatives or products are introduced, independent of each other. At this level, a technological solution is created without a fundamental revision of the border business processes.
- A complete modification of the operating model of the company is being carried out. The changes affect business processes, organizational structures, key performance indicators and staff skills. At this stage, a comprehensive management program is needed.
- At the final level, the way of interaction with suppliers, customers and contractors is changing. New methods of positioning and promotion of the proposed products and the introduction of new ones are being introduced. At this level, innovative technologies are integral to the smooth functioning of the entire organization and are used to create new ecosystems and partnerships. The digital platform becomes the central object, through which unique competencies and innovations in the business model of the enterprise are implemented.
is an inevitable process that will eventually affect all industries, but in each of them the introduction of digital technologies will occur with different speed. Companies from the business-to-consumer sector (media, retail, telecommunications, insurance, banking) have become leaders in the implementation of innovations. Digitalization has affected, albeit to a lesser extent, metallurgical, machine-building, energy and oil and gas companies, although innovations in this area are mainly aimed at internal improvements and organizational issues.
In the near future, the digitalization of small and medium-sized businesses will contribute to the rapid and easy scaling and growth of companies.
Technologies for business digitalization
Elements of digitalization, which are already being used on a full scale in various fields, are robotization, automation and artificial intelligence. Innovative technologies replaced human resource at the stages of production, where routine operations are performed, robotization has covered banking, manufacturing and other areas, which eliminates errors associated with human factor. With the help of artificial intelligence, the optimal modernization of decision-making processes has become possible, in particular through “machine learning”.
One of the most popular digitalization tools is CRM systems using BPM technologies.
CRM and BPM systems are popular digitalization tools
Involves the use of innovative software, which can streamline the company's activities, automate repetitive operations and improve work efficiency, as structural divisions and individually for each employee. Recently, the most popular tool for performing these tasks has been the combination in practice of customer relationship management systems (CRM) and technologies created for business process automation (BPM). One of the most functional and effective CRM + BPM solutions is the bpm "online system from Terrasoft (more details on the website https://www.terrasoft.ru/digital-transformation).
With the help of CRM and BPM systems, it allows you to set up a reference interaction with customers, as well as speed up the work of all departments of the company. As practice shows, the combination of CRM tools and tools for organizing a process-oriented approach (BPM) can significantly increase commercial results and customer loyalty.
Bart Banche – Partner and Managing Director, Head of TMT (technology, media and telecommunications) and Digital The Boston Consulting Group (BCG) practices in Russia and the CIS, has been implementing transformational and strategic projects in the information and communication technology sector for over 17 years , digital media and telecommunications in Europe, USA, Japan, Russia and the CIS.
WHAT IS DIGITALIZATION?
Digitization = business challenge + data + technology
By digitalization, we mean the fullest use of the potential of digital technologies in all aspects of business - processes, products, services and approaches to decision-making. For digitalization, it will never be enough just to have technology as such. In order for the digitalization process to be complete, clearly articulated business objectives and data are required. Digitalization is impossible without three dimensions: the formulated business problem, the availability of data, and the technology itself.
WHAT TASKS DOES DIGITALIZATION SOLVE?
On the basic level Digitalization allows you to optimize operations, reduce costs, and improve the decision-making process. There are three main stages of digitalization that it is important for leaders to be aware of.
The first stage is the introduction of not very large and not very risky, independent initiatives or products. The main goal of this stage is to create technological solutions without a radical revision of related business processes.
The next stage is the transition from disparate initiatives to a broader transformation of the company's operating model. Business processes are part of the changes here, organizational structure, KPI (key performance indicators) and staff skills. At this stage, full integration with basic systems organizations. Such changes already require a comprehensive management program.
The final stage digitalization is a change in the way we interact with external suppliers, customers and counterparties: new ways of positioning and promoting existing products and creating new ones. At this stage, digital technologies are "part of the DNA" of the entire organization and are aimed at creating new ecosystems and partnerships. At their center is a digital platform that embodies the unique competencies and know-how of the organization's business model. Successful examples that have passed all three stages of digitalization on a global scale are General Electric and Daimler.
GLOBAL CASE: McDonald's
*not a BCG case
McDonald's began its digital journey to speed up and simplify customer service in 2004, when touch-screen machines were introduced at a Florida restaurant that allowed guests to self-order. Experimenting in this direction for several years, the company found out that the average check when a person places an order on their own is 30% more. In addition, 20% of customers do not take drinks if the cashier forgets to offer them. The machine, of course, never forgets to do this.
However, a large-scale installation of McDonald's self-service machines began in 2016 and continues to this day. In 2016, self-service machines appeared in 2,600 restaurants around the world, at the beginning of 2017, the McDonald's App mobile application appeared. According to the company itself, installing one machine costs the company $ 60,000. Company representatives have repeatedly noted that cashiers also Those employees who will be replaced by technology will not be fired, but will begin to help the team in the kitchen to make orders faster.
At the same time, the founder and director of Bersin by Deloitte ( analytical framework researcher for Deloitte) Josh Bersin is convinced that completely replacing cashiers and baristas with vending machines at chains such as Starbucks, Peet's, or Philz Coffee, and even McDonald's will not be effective, since ordering from a vending machine is not as exciting, and customers always there must be a choice.
FOR WHICH COMPANIES DIGITALIZATION IS NECESSARY FIRST?
Digitalization is an inevitable process that happens in one way or another in almost all industries. But in different sectors it goes at different speeds. According to BCG analysis, B2C sectors have historically led the way in terms of digital adoption: for example, media, which has already undergone fundamental changes, as well as retail, telecommunications, insurance and banking. Digitization has already significantly affected these industries, but the final result remains to be determined.
Media, trade, insurance and banking
And, for example, metallurgy, the oil and gas sector, the electric power industry and mechanical engineering are lagging behind: the impact of digitalization in these industries is still aimed mainly at internal improvements, it is difficult to fully assess it, and cardinal changes are yet to come.
WHAT BUSINESS UNITS DO DIGITALIZATION BEGIN WITH?
First of all, digitalization concerns all areas of the company's business related to productivity: it is cost control, return on investment. As a rule, the first wave of digital changes in most companies concerns the management of production assets - for example, predictive analytics for maintenance and repairs, as well as planning investments in production assets. This is especially true for infrastructure companies with a large number of physical production assets and the costs of their creation and operation - telecommunications, transport, electricity, etc.
The impact of digitalization is not limited to these areas. For example, the implementation of predictive analytics allows an organization to achieve new business growth opportunities, more accurately understand the opportunities for up-selling and cross-selling to existing customers, which is already being done, for example, by many telecommunications companies, including Kazakhstani ones.
KAZAKHSTAN CASE: Kazpost
*not a BCG case
Kazpost's transformation program was launched in June 2014. The state-owned company had a global task to become a modern and client-oriented postal service, so it was planned to introduce a category-based procurement management system, the main enterprise management processes - Enterprise Resource Planning (ERP), a common service center (SSC) for accounting and tax accounting, a single operating window for the operator, a new model for managing logistics flows, post.kz online service, payment card processing, agency services, e-commerce, direct mail and more. There were also projects that directly affected the quality of customer service: the modernization of post offices, an electronic queue, parcel supermarkets and post offices, a situation center, a parcel tracking service, and SMS notification. All this looks very large-scale, and the transformation is not over yet. However, in a number of areas there is already a tangible effect.
Thus, more than 1,180,000 parcels have been distributed through parcel supermarkets since the start of the project in 2015 to date. Since the launch of the project in 2014, about 670,000 parcels have been sent through parcel lockers. Thanks to the launch of these services, 1.6 million parcels were delivered to Kazakhstan in Q1 2017, which is twice as much as in Q1 2016.
The post.kz service is an online branch of Kazpost. Since its launch in 2016, more than 1 million customers have already used it. About 30,000 unique users visit the site daily. The site allows you to find a convenient location of the post office, change the delivery address of the parcel, calculate the cost of delivery, pay for any services, and even make money transfers. During the transformation, Kazpost launched 12 mobile branches and by the end of the year it is planned to install 17 more mobile branches.
IS A MACHINE MORE EFFICIENT THAN A HUMAN IN BUSINESS?
Robotization, automation and artificial intelligence, as components of digitalization, are already widely used in various industries - in manufacturing, in the transport and banking industries, in the service sector. The global robotics market is growing very rapidly and continuously: according to BCG, by 2025 its volume could reach $87 billion, despite the fact that just three years ago the forecast for 2025 was $67 billion.
Now robots are used mainly to replace people in routine operations in manufacturing, banking and other industries. Robotization virtually eliminates errors associated with the attentiveness of living employees. Artificial intelligence can also be used to optimize the decision-making process, in particular, with the help of "machine learning".
IS DIGITALIZATION NEEDED FOR SMEs?
For SMBs, digitalization means scaling and growing faster and easier. For example, the development of e-commerce opens up new sales channels for SMEs and also potentially reduces the size of the gray economy. According to a joint study by BCG and Samruk-Kazyna, at the beginning of 2017, the share of e-commerce in retail in Kazakhstan was less than 1%, for comparison: in Russia - 3%, in China - 8.3%. We expect that if the Kazakhstan e-commerce market in retail will grow at the same pace as the Russian one, then by 2020 its volume will reach $750-800 million.
Systematic efforts are being made in Kazakhstan to introduce digitalization in small and medium-sized businesses. For example, at the beginning of this year, a project for the implementation of the Open Digital Platform for Small and Medium Business, developed by NCE Atameken with the infrastructural support of Kazakhtelecom JSC, was presented in Astana. It is expected that it will work on the principle of Chinese Alibaba and American Amazon and increase trade in the country by 30%.
GLOBAL CASE: Pony Express
*not a BCG case
Pony Express at the very beginning of its journey in 1992 was exclusively engaged in the delivery of documents and goods "from door to door". In 2014, the company changed its strategy, deciding to become a universal logistics operator in the CIS. The implementation of the strategy took place in 2015-2016 and cost the business 1 billion rubles (about $15 million, this amount includes not only IT costs, but also the construction and equipment of warehouses, replacement of the vehicle fleet, etc.).
The company decided to go in this direction after studying the needs of customers in the logistics market. “Businesses understand that the scheme in which one company delivers to the warehouse, another is responsible for storage, the third sorts and packs, the fourth delivers to the client, etc., has become obsolete. With such an organization of the process, the quality drops sharply, and the costs grow,” explains the motives of the head of the company Georgy Alikoshvili.
As a result, over the past 2 years, Pony Express has become more active in the field of e-commerce, created a constructor for online stores (which allows not only transporting and delivering, but also storing, tracking goods in a warehouse, etc.), updated the platform for cross-border delivery . All this required the development and implementation of a number of IT solutions: event management systems, courier transport logistics systems, trunk transport logistics systems, billing systems, CRM (Customer Relationship Management - customer relationship management system).
HOW MUCH DIGITALIZATION COSTS
The digitalization budget can be very different in different companies and industries. Recent trends are that large organizations constantly increase their investments in IT and digitalization, as it can give them a serious competitive advantage. At the same time, if we talk about SMEs, the development of digital technologies makes it much easier for them to automate their own activities and its cost: for example, the emergence of cloud solutions for SMEs (Salesforce.com and the like) gives them the opportunity to use ready-made modern solutions for automation key processes with minimal investment.
BUY OR CREATE?
In the short term, acquiring off-the-shelf technology and leveraging the experience of more digitally advanced countries can be an effective solution to accelerate organizational transformation. But in the medium and long term, it is necessary to have our own solutions to control strategic industries and technologies.
DIGITALIZATION IN STATE MANAGEMENT
In Kazakhstan, as you know, a project is being developed state program"Digital Kazakhstan", which provides for the formation of a proactive "digital" state. One of the main objectives of this program is the digital transformation of government agencies. It is expected that this will increase the competitiveness of the economy and the quality of life of people, for example, by providing citizens and companies electronic services, automation of processes in state institutions, the introduction of a "single window" system, the full implementation of electronic document management, increasing the transparency of work government agencies and institutions.
HOW DIGITALIZED IS KAZAKHSTAN?
In Kazakhstan on this moment there is a good basic access infrastructure for the further development of the digitalization of the economy. The level of involvement of the population is also quite high: 54% are Internet users. According to the BCG e-intensity index (tracks the development of the digital component of the global economy in 85 countries), the average annual growth rate for Kazakhstan is 23%. This is a positive indicator. However, Kazakhstan still lags behind the average of the BRICS countries (Brazil, Russia, India, China and South Africa), where the growth rate is 27%.
Therefore, the main task in the coming years is to increase the growth rate of digitalization. At the same time, digitalization should become part of the strategic agenda not only of government agencies, but also of national companies and private businesses. There are basic conditions for this. First, the relatively favorable macroeconomic situation. Secondly, attention to this issue on the part of the state: for example, such initiatives as the implementation of the state program "Digital Kazakhstan", the creation of the Astana International Financial Center, the creation of a hub for startups and development advanced technologies– international technopark of IT start-ups AstanaHub.
"Corporation" is a joint project of the Government and "Samruk-Kazyna", in which leading experts tell the audience about modern methods business management. The idea of the project is to show Kazakh businessmen on local and international cases how new approaches change production, logistics, marketing and planning in companies of different sizes.
